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    Lithuania – Changes in Taxation of Employment-Related Income for 2024

    GMS Flash Alert 2024-005 | January 10, 2024

    Lithuania’s government approved the 2024 country’s average monthly salary used for the social security contribution (SSC) base and progressive personal income tax (PIT) calculation.1

    Following Lithuanian legislation, a cap is applied for the SSC (ceiling) and progressive income tax rate.  The value of the SSC ceiling and threshold for the progressive PIT amounts to 60 times the average monthly salary, which gets adjusted annually as the country’s average salary tends to increase.

    The changes became effective as of 1 January 2024.

    WHY THIS MATTERS

    Employers will need to take into account the changes for 2024.  In cases of assignments to Lithuania where assignees are subject to Lithuanian taxation, and for assignees working outside Lithuania but still subject to Lithuanian taxation, international assignment cost projections and budgeting should reflect the changes described.

    Where appropriate, adjustments to gross-up packages and withholding taxes may need to be considered.

    Summary of Taxation of Employment-related Income as of 2024

    The approved average monthly salary amount (applicable for tax purposes) is EUR 1,902.70.

    • The ceiling for SSC (except for mandatory health insurance contributions and employer’s contributions) equals EUR 114,162 (EUR 101,094 in 2023).
    • The standard SSC rates for income up to the SSC ceiling:
      • Employer’s part – 1.77 percent.
      • Employee’s part – 19.5 percent (an additional 3 percent is withheld if the employee is participating in a certain second pillar pension accumulation fund).
    • The standard SSC rate for income exceeding the SSC ceiling:
      • Employer’s part – 1.77 percent.
      • Employee’s part – 6.98 percent.
    • PIT rates for total annual employment-related income together with remuneration paid for activities of the supervisory or management board and certain income of managers of small partnerships:
      • 20 percent for income up to EUR 114,162 (EUR 101,094 in 2023).
      • 32 percent for income exceeding EUR 114,162 (EUR 101,094 in 2023).

    KPMG INSIGHTS

    Companies that need assistance with determining the appropriate workforce subject to the SSC and PIT revised base for 2024 and payroll-related obligations, should contact their qualified tax professional or a member of the GMS team with KPMG in Lithuania (see the Contacts section).  Penalties may be incurred for lack of compliance.

    Contacts

    Ignas Ričkus
    Ignas Ričkus

    Manager, Tax

    KPMG in Lithuania

    lina-grainiene
    Lina Grainiene

    Senior Manager

    KPMG in Lithuania

    Additional Resources

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    Footnotes

    1  Legislative changes  (Lietuvos Respublikos Valstybinės socialinių fondų biudžetų 2024 metų rodiklių patvirtinimo įstatymas) accepted by the Parliament of Lithuania (in Lithuanian).

    Disclaimer

    The information contained in this newsletter was submitted by the KPMG International member firm in Lithuania.

    GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

    © 2024 "KPMG Baltics", UAB, a Lithuanian limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.